Oklahoma provides model for other states with new fuel rules for electricity generation

A group backed by the natural gas industry has pointed to new Oklahoma rules as a model for other states in long-term fuel contracts for electricity generation.
by Paul Monies Modified: June 28, 2012 at 10:20 pm •  Published: June 29, 2012
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The American Clean Skies Foundation report said states should allow regulated utilities to enter into long-term fuel contracts for natural gas, with hedging to smooth out the fluctuations. It said suppliers and generators could agree to a fixed price for part of the fuel, with the balance priced at market rates. The report's authors said work still needs to be done to help capture savings for ratepayers while natural gas prices remain low.

“Unless key changes to commercial and regulatory frameworks are established at the state level, longer-term, large-scale fuel shifts by existing power plants and commitments to new gas-fired capacity are at risk,” the report stated.

Gregory Staple, the foundation's CEO, said the long-term contracts can help reduce risk for gas suppliers, electricity generators and customers.

“The once-in-a decade opportunity we see for electricity generators to secure affordable gas over the mid- to longer-term is similar to the historic opportunity that homeowners and businesses now have to refinance mortgages at today's record-low interest rates,” Staple said in a statement.

Utility customers have long benefited from low coal prices, which can be locked in with long-term contracts between three and 10 years. In public filings on the Oklahoma fuel rule earlier this year, a group of coal producers warned regulators against favoring one type of fuel over another. The group, American Coalition for Clean Coal Electricity, said tilting the fuel procurement process to a specific fuel could unnecessarily burden residents and businesses.

Oklahoma's rules keep competitive bidding for fuel contracts and don't favor one type of fuel over another. Fuel contracts will no longer require pre-approval by the commission, which sometimes led to procedural delays. The commission retained the power to review long-term fuel contracts to make sure they are in the best interests of consumers.

by Paul Monies
Energy Reporter
Paul Monies is an energy reporter for The Oklahoman. He has worked at newspapers in Texas and Missouri and most recently was a data journalist for USA Today in the Washington D.C. area. Monies also spent nine years as a business reporter and...
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